We need to build 250,000 new homes a year to keep up with demand.

We haven't come close in decades.

Failure to act will mean falling home ownership, and an economic recovery stalled by a volatile housing market. Rents will rise, and the cost of keeping a roof over their head will become unbearable for many more families.

Here's KPMG and Shelter’s blueprint for the government. Drag the scroller below to see how we can build the homes we need.

The problem

Buying land is the most competitive part of house building, but once it's bought there are few incentives to build quickly. To make back the money they've spent buying a site, it often makes sense for developers to draw out building when house prices are rising, and to stop and wait it out when prices fall. If we're going to build the homes we need, this has to change.

Our vision

We need a land market that's efficient, transparent and stable - that means changing the way builders and developers compete for land. The government should give our towns and cities the tools they need to bring more land into the market, at lower costs.

How the government can make this happen

Make the land market more transparent, so that developers and local authorities can tell how much land is available and what it's worth.

Release infrastructure spending to unlock stalled sites. This could be done by making better use of existing infrastructure funds, and by devolving budgets to local leaders where appropriate.

Give local authorities the tools they need to make the land market work. This means new local tax powers, incentivising those with land they don't intend to build on to sell it to those who will.

Bring land into the market at more reasonable prices, so that our successful cities can grow, and new garden cities can be built. This would build on recent government announcements.

Hamburg’s HafenCity project turned 157 hectares of mostly disused inner-city land into high-quality homes, and could be a good model for New Home Zones in England. The project began in 1997 when Hamburg’s mayor announced his vision for a major growth area in the city.

Developers competed over the master plan for the site, presenting their ideas for spatial planning, infrastructure, flood defences, green spaces, tenure mix and employment areas. Crucially, they also planned how to maximise the speed of building without compromising the quality of the homes.

The winning developer distributed contracts for the site on the basis of quality, as well as cost. A key part of the scheme was that housing sites had to be advertised with a fixed bid price, to stop developers speculating on future house price growth.

One way that future HafenCity residents plan new homes is to buy plots together as co-operatives, with the development company helping them contract out the design and construction. This all adds to the amount of good quality, affordable homes in HafenCity.

Graph: new land made available for homes

The problem

With land tough to get hold of, and a risky boom-bust housing market, our home building sector has become extremely concentrated, with small builders increasingly squeezed out. This has led to a system that is less competitive, less resilient to busts, and less productive than it could be during booms.

Our vision

We need the big developers working at full capacity, but they won't solve the shortage alone. To create a diverse, resilient house building sector, we need to encourage innovative ways of building, and make it easier for new and smaller builders to break into the market.

How the government can make this happen

Set up a 'Help to Build' scheme, using government guarantees so small builders can access the funds they need to get building.

Commit to stabilising house prices. Volatile prices make it harder for small builders to compete in booms, and to survive during busts. The Bank of England should lead an immediate review into achieving stable prices.

Make custom build mainstream. The government should increase custom builds to twenty percent of all new homes built, making housing supply more diverse, and more resilient.

Design homes fit for the 21st century. The government should set minimum space standards and encourage excellence in design, to give a level playing field for all builders.

In Germany, house building is much more responsive to prices than in England, with rising prices triggering a matching rise in building.

One reason is that local authorities actively use their land powers to promote custom build, and these builders tend to commission small, local firms to build their homes. In Germany, more than half of all homes are custom built, compared to around 10% in the UK.

Custom built homes tend to be more spacious and higher quality, so having a large custom build sector drives developers to compete on quality – pushing up standards across the board.

There are some signs that England is starting to catch up. Cherwell council in Oxfordshire is buying 187 hectares of land to create the largest custom build community in the UK, with communal facilities and commercial space. Those who choose to buy a plot will have multiple building options, including group builds and contractor schemes.

In the 2014 Budget, the government announced it will consult on a new ‘Right to Build’ scheme, giving custom builders the right to a plot from councils, with a £150 million repayable fund to help provide the plots.

Graph: how the boom-bust cycle affects small builders

The problem

Falling investment in house building has led to a dramatic decline in the number of new homes we build every year. With it, the chance of ownership and a stable home has become ever-more distant for millions of families.

Our vision

We need more sustainable funding to build genuinely affordable homes. This means finding innovative ways to finance new homes, with public and private investment firing on all cylinders.

How the government can make this happen

Prioritise spending on housing, by extending the Affordable Homes Programme to 2020 and boosting it to £2 billion per year - roughly the levels seen before recent cutbacks.

Set up a National Housing Investment Bank backed by new housing ISAs, giving loans and guarantees to help build new homes.

Raise the cap on local authority borrowing, freeing up money to build more homes at the local level. This would build on Coalition reforms, letting councils become major house builders again.

For more than five decades France has run a successful national housing investment bank, providing significant funds for affordable housing.

Every French household has the right to open a tax-free ‘Livrét A’ account – a savings account of up to €15,300 at their local bank. The average deposit in these accounts is €3,000. These savings are pooled by a publically owned investment bank, which pays savers a defined interest rate.

These short-term deposit savings (which are 8% of all household financial assets in France) are then turned into long-term loans of 15 to 50 years to finance rented housing and urban renewal. This removes the need for high levels of government funding.

As the deposits in these savings accounts are guaranteed, the recent global financial turbulence has prompted a rush to deposit savings in them, increasing the amount of funds available for social housing development when it is needed most – during an economic downturn.

Graph: public investment in house building over time

The problem

Too often, plans for housing growth suffer from a lack of resources and leadership at the local level. Where successful cities do want to build more homes, few have the powers to do so. And tensions between cities and rural authorities too often get in the way of plans for growth.

Our vision

We need to empower cities and towns to respond better to local need. This means giving local authorities more power, removing barriers to development, and linking infrastructure spending with house building to meet local needs. With the right tools, councils can be major house builders again.

How the government can make this happen

Plan better at the city-region level by incentivising neighbouring local authorities to plan for growth together, and to better integrate new homes with new infrastructure.

Determine the need for homes across functional economic areas, by assigning Local Enterprise Partnerships to properly assess housing need across their areas.

Allow more 'green belt swaps', where local authorities free up low-value green belt land for homes in return for protecting better quality land elsewhere. Swapping just 0.5% of the green belt in this way could build more than 100,000 homes.

Initially conceived as part of Sweden’s 2004 Olympic bid, the Hammarby development is now recognised for its strong local leadership and visionary use of brownfield land. On its completion in 2017, it will include 11,000 homes and 10,000 new jobs on a site measuring 160 hectares.

The Stockholm City Development Department managed the land and infrastructure, gathering land for the site through deals with local owners. Compulsory purchase powers (although rarely used) meant the city could buy the land at a fair price.

Once the land was purchased the city decontaminated it and built tram lines, energy and water mains and a new ferry system. A range of private sector firms have since been responsible for delivering homes on the sites, following a plan laid down by the city.

By providing strategic leadership over the whole site and making land available to developers at affordable prices, the local authority has delivered on a large house building program while still meeting high environmental targets.

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